With approximately one in six children in the United States between the ages of 3 and 17 diagnosed with a disability, practitioners will increasingly serve clients who wish to leave assets to a family member with special needs. Comprehensive planning for the transfer of assets to a beneficiary with a disability requires not only a focus on maximizing the longevity of those assets by ensuring the assets are in a protective arrangement, but also a broader discussion on who will provide future daily care for the beneficiary, where such care will be provided, and the expenses related to such care. Understanding the financial and personal needs of the beneficiary allows the practitioner to identify the client’s goals and provide recommendations that alleviate anxiety regarding the care a loved one will receive when the client is no longer able to manage such care.

The four main methods of transferring assets to a beneficiary with a disability include: funding a third party-funded special needs trust; opening an ABLE account; a transfer to someone other than the individual with disabilities to hold and use for the benefit of such individual; and an outright gift to the beneficiary. The following questions will guide the practitioner in recommending an appropriate method of transfer:

  • Does the beneficiary currently receive any means-tested government benefits, such as Supplemental Security Income (SSI) or Medicaid, that limit the amount of assets permitted in the beneficiary’s name?
  • Will the beneficiary receive any means-tested government benefits in the future?
  • Is the beneficiary able to make his own legal decisions?
  • If the beneficiary is competent, is he able to manage and access his own monies in an independent manner or with the assistance of a trusted individual?
  • Where will the beneficiary reside when the current caregiver is no longer able to provide adequate care?
  • What is the cost of such care?
  • Who will pay for such care?